Updated: January 23, 2020 11:20:01 am
(By Anupama Joshi)
India’s annual healthcare spend hovers around 4 per cent of GDP with high out of pocket expenditure and low public spend on healthcare (only around 1.18 per cent of GDP). As India inches towards its goal of universal healthcare, there is a need for the budget to try to ensure that healthcare sector requirements are well funded and the budget contains provisions that energise accessible, affordable and quality healthcare. We expect the government to focus on various fiscal and non-fiscal measures to help improve the current healthcare situation in the country.
Access to healthcare
Allocate more budget towards Ayushman Bharat to ensure the continued success of the scheme. As of September 2019, nearly 4.7 million people had availed of the scheme with treatments worth nearly Rs 7,500 crore delivered within one year. Of this, nearly 55 per cent of the expenditure was on tertiary healthcare. As per the latest figures reported on the PMJAY website, nearly 7.6 million hospitalisations have happened under the scheme. We expect this number and the expenditure to significantly grow over the next few years, given the total coverage of 550 million people. Thus the government would need to significantly increase the budget from the current allocation of Rs 6400 crore in the last budget.
Increase allocation for health and wellness centres to strengthen primary preventive and promotive care. As of September 2019, nearly 21,000 health and wellness centres have been operationalised in the country and have served nearly 17 million people with free diagnostic screening, drugs and consultations along with referral to higher tertiary care relating to non-communicable diseases and maternal and child health. Continued budget allocation towards this initiative is required to achieve the target of operationalising 1.5 lakh Health and Wellness centres by 2022.
Aid infrastructure creation in healthcare by according it priority sector status to enable better funding access. Additionally, the government could look at setting up specialised funds for infrastructure development for hospitals in Tier 2, Tier 3 and rural areas. Special tax holidays given to such facilities as well as a weighted deduction under section 35AD, to the tune of 150 per cent or higher of the capital expenditure, could aid more infrastructure creation in resource-constrained areas. Further, an extension of such a scheme for hospitals with 50 beds will enable more infrastructure development in smaller tier 4 cities and provide the supply side healthcare facilities which can be reimbursed under PMJAY.
Quality of healthcare
Ensure adequate budget to implement the National Digital Health Blueprint, to enable digital convergence of the healthcare programs in India.
Boost healthcare innovations by creating a special innovation fund to promote innovations in health technology, digital health initiatives, alternate care models – primary, preventive, palliative etc. Additionally resolution of angel tax issues for health technology companies could aid growth and sustenance of more startups in the space.
Incentivise use of technology in healthcare – Reduction of GST from current 18 per cent on IT technology services can aid more hospitals to adopt such services to reduce overhead operational costs as well as improve efficiency in quality care delivery.
Affordability of healthcare
Improve focus on preventive health by providing a higher exemption for preventive health checks, to the tune of Rs 15-20,000, from the current Rs 5,000 under 80D.
Improve affordability of care through tax incentives by reducing GST on medical devices – for example, reducing the GST rate on radiation therapy equipment from the current 12-18 per cent to 5 per cent will go a long way to make healthcare services more affordable to patients.
Boost local manufacture of affordable medical devices for both domestic and export market. Bulk of the medical devices are imported in India with little export. The Draft Medical Devices (Safety, Effectiveness and Innovation) Bill, 2019 proposed by the NITI Aayog is expected to have provisions to create an enabling ecosystem for manufacturing, research and innovation and to reduce the import dependency for medical devices4, however, it is not yet in the public domain.
While several measures have been undertaken to provide a boost to “Make in India”, further policy action such as tax holidays, lower GST on domestically manufactured products, incentives for R&D, patent filing etc. are required to support local manufacturing.
The author is a Partner at Deloitte India. Views expressed are the author’s.
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